# Residual Analysis

After controlling for pension spending, financial depth, kaopen, and eurozone membership:

| Analysis     |   Z_1_baseline |   Z_1_full_model | % explained   | % residual   |    N |
|:-------------|---------------:|-----------------:|:--------------|:-------------|-----:|
| Full sample  |        5607.78 |         -771.87  | 113.8%        | -13.8%       | 1118 |
| Income: high |        6135.8  |         -861.518 | 114.0%        | -14.0%       | 1015 |
| Income: mid  |        1404.6  |         1238.07  | 11.9%         | 88.1%        |  103 |

**Interpretation**: The residual Z_1 coefficient reflects unmeasured regulatory constraints (pension investment mandates, local currency rules, home bias regulations, etc.)
